INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Summary of components of income tax expense (benefit)

Earnings before income taxes and the provision for income taxes are presented in the following table.

	Year Ended December 31,
(in millions)	2020		2019		2018
Earnings before income taxes:
U.S.	$	437	$	310	$	220
Non-U.S.	527		955		976
Total	$	964	$	1,265	$	1,196
Provision for income taxes:
Current:
Federal	$	19	$	32	$	17
State	2		4		5
Foreign	252		245		259
Total current	273		281		281
Deferred:
Federal	70		150		(40)
State	11		23		(8)
Foreign	43		14		(22)
Total deferred	124		187		(70)
Total provision for income taxes	$	397	$	468	$	211

Schedule of effective income tax rate reconciliation

The following table provides a reconciliation of tax expense based on the U.S. statutory tax rate to final tax expense.

	Year Ended December 31,
(in millions)	2020		2019		2018
Income taxes at U.S. statutory rate of 21% for 2020, 2019 and 2018	$	203	$	266	$	251
Increases (decreases) resulting from:
Net tax on remittance of foreign earnings	93		22		(22)
Valuation allowance adjustments	53		(2)		(11)
Reserve adjustments, settlements and claims	45		46		32
Foreign rate differentials	21		35		28
State taxes, net of federal benefit	12		3		6
U.S. tax on non-U.S. earnings	11		15		37
Other foreign taxes	9		10		8
Non-deductible transaction costs	8		3		3
Impact of transactions	3		124		(1)
Impact of foreign derived intangible income	(1)		(1)		(15)
Affiliates' earnings	(4)		(7)		(10)
Tax credits	(12)		(17)		(26)
Changes in accounting methods and filing positions	(18)		(7)		(30)
Tax holidays	(36)		(26)		(28)
Revaluation of U.S. deferred taxes	—		—		(4)
Other	10		4		(7)
Provision for income taxes, as reported	$	397	$	468	$	211

Reconciliation of the total gross unrecognized tax benefits

A roll forward of the Company's total gross unrecognized tax benefits is presented below:

(in millions)	2020		2019		2018
Balance, January 1	$	146	$	120	$	92
Delphi Technologies acquisition	54		—		—
Additions based on tax positions related to current year	14		7		24
Additions for tax positions of prior years	9		26		18
Reductions for closure of tax audits and settlements	—		—		(8)
Reductions for lapse in statute of limitations	(5)		(6)		—
Translation adjustment	13		(1)		(6)
Balance, December 31	$	231	$	146	$	120

Summary of tax jurisdiction

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2015 and prior	Japan	2018 and prior
Barbados	2017 and prior	Luxembourg	2013 and prior
China	2012 and prior	Mexico	2013 and prior
France	2015 and prior	Poland	2013 and prior
Germany	2011 and prior	South Korea	2013 and prior
Hungary	2013 and prior	United Kingdom	2015 and prior

Schedule of deferred tax assets (liabilities)

The components of deferred tax assets and liabilities consist of the following:

	December 31,
(in millions)	2020		2019
Deferred tax assets:
Net operating loss and capital loss carryforwards*	$	656	$	70
Interest limitation carryforwards*	111		—
Other comprehensive loss	106		53
Pension and other postretirement benefits*	93		25
Research and development capitalization	57		74
Unrecognized tax benefits	47		49
Employee compensation	39		32
State tax credits	28		21
Warranty	27		15
Foreign tax credits	16		13
Other	161		97
Total deferred tax assets	$	1,341	$	449
Valuation allowance*	(529)		(71)
Net deferred tax asset	$	812	$	378
Deferred tax liabilities:
Goodwill and intangible assets*	(279)		(174)
Fixed assets*	(176)		(144)
Unremitted foreign earnings*	(156)		(56)
Unrealized gain on equity securities	(91)		—
Other	(95)		(50)
Total deferred tax liabilities	$	(797)	$	(424)
Net deferred taxes	$	15	$	(46)

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*Balances include the impact from deferred tax assets and liabilities acquired or assumed from the acquisition of Delphi Technologies on October 1, 2020. Also includes the impact to deferred tax liabilities related to the recognition of intangible assets associated with the acquisition of Delphi Technologies.